There's A Massive Opportunity In Peer-To-Peer Payments — Here's Why They Could Be Such Big Business

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Mobile peer-to-peer payment apps, which let people send money to one another instantly, are gaining rapid adoption in the U.S. and globally. For example, BI Intelligence estimates Venmo will process $2.5 billion in volume this year.

The secret to the success of these apps is that they solve a real problem for users: They give them a way to pay each other when they don't have cash or a check. For example, if you go out to dinner these apps make it easy to pay a friend back for covering the cost of your meal. In fact, among U.S. adults who use P2P payment apps, 49% say they use them for dining-related transactions, according to Nielsen.

In a new report from BI Intelligence we size the opportunity for mobile P2P transactions, take a high-level look at a handful of these apps and how they work, what the opportunities are for monetization, and explore how P2P payments could be the bridge to consumer uptake of mobile payments.

Here are some of the report's key findings:

Globally, the volume of P2P payments is over $1 trillion and only a sliver of those transactions are currently conducted via mobile phones.

We forecast that U.S. transaction volume will reach between $7 and $9 billion in 2014 and provide an exclusive 5-year estimate for volume from 2013-2018 in the report.

While mobile P2P payments are beginning to catch on in the developed world, in many emerging markets they are already popular because people effectively use them as a bank account.

A great case study is Kenyan telecom Safaricom's M-Pesa product, which allows its users to transfer money to one another via text message. Largely as a result of M-Pesa's success, an impressive 92% of Kenyans say they have used mobile P2P payments.

How to monetize these apps is a question largely left unanswered. But for the time being the goal is to onboard as many users as possible. Like social networks, the world of payments is largely dependent on network effects; the more people that use a product the more valuable it becomes.

In full, the report:

Forecasts transaction volume for mobile P2P payments through 2018 and gives an estimate for the size of global P2P payments.

Explains the value of mobile P2P payments to consumers and why there is such a compelling case for mass adoption.

Profiles ten companies' P2P services that we think are indicative of the breadth of services on offer.

Analyzes the major obstacles that mobile P2P payments face, including interoperability and security risks.

Interested in getting the full report? Here are two ways to access it:

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